Baroness Gardner of Parkes: My Lords, I am grateful to the noble Lord for giving way. Some time ago I took up an exact example of that--of someone being unable to afford a service charge--with my noble friend on the Front Bench. It related to someone living in Hammersmith. The answer I received through my noble friend's department was that if paying the service charge was an obligation under the lease, the council would be able to help through housing benefit. If it was not an obligation, why would one pay it?

Lord Dubs: My Lords, time is against my going into details. I can assure the noble Baroness that I was told that the widow had a need, that the council wanted to help, but that the landlord refused to change the lease to make that possible. Perhaps we can deal further with that point in Committee.

Having looked at what happened in the other place, I regret the fact that a number of amendments made in Committee were removed by the Government on Report. Perhaps I may refer to them briefly. I regret that the Government reinstated the low-rent test. I regret that the 50-year qualifying period was reinstated. I am sure that noble Lords have also received a letter from a person in N1 who says that, having a lease of less than 50 years, his ground rent has been increased from typically between £200 and £300 per annum to between £4,500 and £5,500 per annum without any statutory protection. That is a swingeing increase and, I should have thought, a good argument against the 50-year qualifying period. I have already said that establishing a right to manage is the proper way forward. I regret that that was knocked out of the Bill in the other place on Report.

Finally, I very much regret that Clauses 165 and 166, which deal with people from abroad and asylum seekers, contain further provisions which are detrimental to justice for those people. My question for the Minister is: why do we need to have such provisions in this Bill when we already have them in another Bill that is going through this House? What is the purpose of that? Is a different principle being established? In which case, why bother about the Asylum and Immigration Bill? If they are identical, what is the need? Perhaps the Minister will be able to give the House some satisfaction on that point. I should like him to say that Clauses 165 and 166 are unnecessary.

6.53 p.m.

Lord Selsdon: My Lords, I am afraid that I have to declare some interests today, although they are already recorded. They will make me seem a little incestuous. I am a director of a large public construction company which builds houses. I am also on the international board of a large building materials company, and with another international group which makes washing machines and baths. To a large extent, all of their futures depend on an active housing market. However, there is worse to come, because I am a tenant of one of the great estates in London--I am very happy with the situation in which I find myself--and I am the manager of another property belonging to a great estate in London.

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In fact, I am the manager by accident because when I had a flat there I undertook to take on the responsibility for management. That is a burden.

However, I should like to step back and to ask your Lordships to ignore all of those incestuous interests. I want to go both backwards and forwards. I want to take up the suggestion of the noble Baroness, Lady Fisher, who made a robust intervention and comes from that great area of Birmingham which has done so well in mixing conservatism and socialism and the public and private sectors over three generations.

I go back to the time when houses were important in politics. They have always been important to people. There can be no more plaintive cry than, "I am homeless and I am jobless. I am told that I cannot have a home unless I have a job and that I cannot have a job unless I have a home". At the other end of the scale there are families in which a widow or a widower has saved for years and is living in his or her own home but has to say, "I hope that I do not live much longer because I cannot afford to stay in this home and, if I sell it, I shall have nowhere to go".

If I remember correctly, Harold Macmillan said, "Elect us and we will build 300,000 houses a year. We will find homes for the heroes of the war". In those days there was no planning permission. Old railway wagons were brought into use, as were hand-crafted huts and prefabricated buildings. The south coast was, to some extent, ruined as restrictions were lifted. Today we find a fairly similar situation.

The housing market has changed. If we look backwards, we see that people thought that the state should provide houses. If we look forwards, we feel that the state should not provide houses. The noble Lord, Lord Williams, tried to accuse my noble friend of being a horse--I think that that is what he said; I cannot remember exactly, but I remember the difference--

Baroness Hollis of Heigham: My Lords, my noble friend said that the Bill was a pantomime horse.

Lord Selsdon: My Lords, a horse gets up forwards. A cow gets up backwards. A horse kicks backwards and a cow kicks sideways, as those of us who were brought up milking cows before that was done using electricity know full well. If we are horses, I suggest that noble Lords opposite may well be deemed to be cows.

However, it is not the duty of government to build houses. That is the duty of the house builders. The problem lies in whether we can build affordable homes today. What are the macro-economic and social factors which have brought about the changes that concern us today? On the social front, I think that it is rather sad that the original house of two up, two down, for a married couple with two children has had to go. Such houses are not easy to split into four flats. If we analyse the total housing stock--the total stock of homes--in this country on a square footage basis, we see that there is adequate square footage to accommodate everybody adequately. However, that breakdown in size has caused a problem. The existing housing stock is not suitable for the existing people. We now have single-parent families and households that comprise ones and twos.

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The problem was that it was not possible to build at affordable levels. Why? The economic factors can be summed up in one word: inflation. Those of us who go back to the 1950s will recall that a five-bedroomed house here in Westminster cost £10,000 and a house in the country with 20 acres and a river cost £10,000. That is true because that is exactly what my mother bought when she sold a house and came to London and became the first woman to be Lord Mayor of Westminster. In those days it was an excellent council--

Baroness Hollis of Heigham: Say that again!

Lord Selsdon: My Lords, I said that in those days it was an excellent council. The noble Baroness has now put me off my stroke, which is most unfair.

My point about inflation is that it destroys people's ability to buy houses. Over a period of time this Government have changed attitudes so substantially because they have destroyed inflation. Unfortunately, many people regret that that has happened--even those with savings. People who have savings in a building society feel that their savings have been eroded because they cannot equate interest rates to the reduction of growth in the cost of living. That has had an impact on some people's attitudes to housing. Previously, people used to buy houses because they thought that they were a good investment and because they provided security. As the noble Lord, Lord Dubs, said, people need a home. We are a home-owning democracy. We are home owners by wish. It is part of our political beliefs. We like to have a home--perhaps more than any other country in the world and that is because we have had a stable society for generations and because the fear of losing a home because of war or government disruption no longer exists.

However, the removal of inflation causes problems. It means that people can no longer feel sure that if they buy a home and borrow to buy it they will do themselves good in the long term. In a very short space of time, interest rates which were effectively half or quarter the rate of inflation rose to double the rate of inflation. Even today, someone who borrows on a mortgage may well find that interest rates are three times the rate of inflation. Therefore, the main factor that increases the value of a home--and therefore the sense of security--is market demand. A house is no longer a fixed asset that rises in value in an inflationary environment. There will always be an element of inflation, and in general property will be a good investment provided that one lives in it.

As to the longer term effect, if inflation remains low we may see a switch to the rented sector. In many countries of the world people who retire put their pensions into owning property which they rent out to provide them with a reliable income. The tenant has no fear because he knows that if he wishes to leave that property there will be another one on the market at the same price, and the market makes the price. I believe that in this country the transition will take a long time, and for the foreseeable future we must accept that people of all political persuasions will demand to own their own homes.

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Are we able to build affordable homes? I pick up the point raised by the noble Lord, Lord Northbourne. If there is so much fraud in the field of housing benefit claims I calculate that that is more than enough to satisfy the right reverend Prelate the Bishop of Oxford in terms of building new houses. If one looks at affordable or cheap homes and accommodation for students or nurses who work in hospitals, the cost of a unit, small though it may be, may come down to £12,000 or less. One of the problems is the availability of land and planning permission and the cost of land.

I cannot suggest what relaxations should take place, but unless there is movement in the housing market affordable homes will not be developed. With stability, there will probably be movement in the housing market. We know from the number of "For sale" signs outside houses that there is plenty of demand to sell. We also know that mortgages are cheaper than they have been for 30 years. In relative terms it is cheaper to buy a house today than it was 20 years ago. It is possible to start the market moving, and it is the market force which creates greater demand.

I am concerned that over a long period successive governments have tinkered with the situation. The schedules to the Bill indicate numerous attempts to try to improve or alter the position. Basically, there are those who provide money for people who wish to own homes: the building societies and the banks. One basic fact--in respect of which the period of 50 years appears to be so significant--is that in general banks or other lenders are reluctant to lend to people who wish to buy property unless there is a lease of at least 50 years. I do not believe that that commercial attitude will be changed easily. It is difficult to borrow money on short leases.

An additional element is the knowledge that there is a freeholder and a tenant, and there are good tenants and freeholders as well as bad tenants and freeholders. Sometimes, in the middle one inserts a strange creature who holds the head lease. If he is bad he can cause problems for both the freeholder and the tenant. I believe that this Bill goes a long way to provide added protection and security and to reduce costs. But we are not considering any moral factors; we are talking about money. As the Bill goes through Committee stage it may be that, as in the case of the leasehold reform Act, different factions will table amendments based upon a feeling that they may lose or gain. It is easier to do these things now than it was before because the chances of gain are not so great. In a more stable, non-inflationary society it is easier to determine values and these factors are not quite as great.

It is to Part III of the Bill that I shall address myself at Committee stage. Although it contains a number of mistakes, I believe that it goes quite a long way. I hope that noble Lords opposite will not try to disrupt what I believe to be an excellent attempt to get things moving forwards. I regret that there is such a concept as leasehold, but I do not believe that it is easy to change it. To me, it means that a person has his own door that leads on to the front street. As soon as one has a block of flats there are common areas for which people are responsible. To get a lot of people together to try to manage a single block, when they have never managed

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anything of this kind before, is extremely difficult. This is a matter that has caused me great concern from time to time. It is difficult to satisfy everybody all of the time. I believe that, if possible, the relationship between the freeholder and tenant should be a direct one without intermediate lessors. But for a period of time there must be an organisation or structure that looks after common parts, in blocks of flats, for example. I have been supportive of the concept of commonhold. I believe that the great estates also support it. The discussion paper in 1990 went a long way. I do not believe that there is as big a difference between the political parties on that concept as may appear. We are concerned purely with its definition. If tenants, landlords and governments can give some impetus to the concept, particularly in relation to multi-occupied buildings or flats, it may go a long way. I hope that the amendments that are tabled will not be onerous and disruptive, because in my view the Government have done an excellent job. I wish them and their horse well.

7.6 p.m.

Lord Berkeley: My Lords, my noble friend Lord Williams of Elvel said that this was the second half of a large amount of housing legislation which contained 300 clauses. Without wishing to turn this House into a zoo, I prefer the metaphor of the curate's camel--not a large one--which bites and kicks. (I believe that it kicks sideways.) This measure has good and bad parts. I am concerned if this is to follow Part II of the Housing Grants, Construction and Regeneration Bill. That Bill began with virtually unanimous support from the industry, which it was designed to help. When it left this House it had attracted a great deal of condemnation. I understand from colleagues in another place that there is a good deal of pressure to withdraw that part completely. I wonder whether parts of this Bill will suffer the same fate. I have received a large number of comments about Part I. A great deal of concern has been voiced by organisations which have to deal with the problems on the ground.

I wish to cover two aspects very quickly: first, the effect on the construction industry; and, secondly, the selling off of affordable rented accommodation. Does the Bill help the building and construction industry? The Government tell us many times in the Bill and elsewhere that it will encourage new building and greater refurbishment. The answer from the industry is that it will not do that and it just introduces more red tape. The ADC and AMA believe that it will not create a single additional home. I view that with great concern. They say that if there will not be more, or even the same, public finance, extra homes will be created only if there is significant private investment. We have to ask ourselves whether that will happen.

If the transfer of local authority housing to local housing companies or associations does not go ahead unless tenants support it, there will be no more houses. There appears to be little likelihood that tenants will support it in urban areas. If one looks at the estates in the worst condition, it is unlikely that they will be refurbished without pump-priming investment. Will that happen, given the current government squeeze on

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finance? To the extent that private resources are brought into investment in local authority stock, the Government are likely to make compensating reductions in the public provision of local authority investment, which will lead to a net decrease in investment. I hope that the Minister will be able to provide some comfort that that reduction will not occur.

I turn now to the sale of affordable housing. I pose the simple question: why is it necessary for any provision to be made for people to purchase affordable housing? I am not talking about the purchase of leases, which is a separate subject. Is it just a question of their status and the property-owning propaganda that we have had for, I suppose, 20 or 30 years since the war? Affordable housing should be just that--for those who cannot afford to buy. I am sure that the proposal is not made in response to the pressure for windfall profits--that those providing affordable houses would like to sell them and receive them more profit from what was originally government finance. If anyone living in affordable housing wishes to own a property, they should move and buy on the open market. That would leave the affordable housing available to those who need it, helping to keep a balanced community, as the right reverend Prelate the Bishop of Oxford suggested.

As the noble Baroness, Lady Hamwee, said, the CMA, the CPRE, and the William Sutton Trust have all expressed concern about the loss of affordable housing in rural areas. That is a serious concern. I am sure there is equal anxiety in urban areas. Why are the Government hooked on the notion of a property-owning democracy? It is a property-owning-negative-equity democracy at the moment. We have heard all the propaganda that owning is good and renting is bad. There seems to be status in owning. I declare an interest: I own a small property in which I live. It is true that after the war renting was bad. There were serious housing problems, but that was 50 years ago.

As the noble Lord, Lord Selsdon, said in an eloquent and moving speech, no such status is involved in owning property on the Continent. Many prosperous properties are rented at market rates. There is no evidence that the overall quality of housing is any better or worse in the UK. There is obviously good and bad. Renting is a viable option.

I do not believe that the Government have made any case for the sale of affordable housing. In the interest of shortening some of the time that the House may spend in Committee, there is merit in deleting much of Chapter II, Part I, Clauses 16 and 17. Instead, the vast government propaganda machine should do a U-turn and start promoting the attractions of flexibility, mobility, and the lack of negative equity that renting will provide. It should be advocating renting at a market price for the market end of the spectrum and affordable rents at the bottom end of the spectrum. That is a suggestion which we should look at in Committee. It will probably save us, as I said, many hours of Committee time.